EU parliament sees "enormous opportunity" in U.S. trade deal

European Parliament President Martin Schulz listens to a question during the Reuters Future of the Euro Zone Summit in Brussels March 7, 2013. REUTERS/Yves Herman

BRUSSELS (Reuters) - The head of the European parliament has come out firmly in favor of a trade deal with the United States, soothing concerns that the increasingly influential body could block a deal on which talks are due to start in June.

Europe and the United States can create a free market of 800 million people and counter the growing power of China through a transatlantic trade deal, the parliament’s Socialist head Martin Schulz told Reuters on Thursday.

Brussels and Washington are on track to launch negotiations for an accord that would encompass half the world’s economic output. But they need the parliament’s support because, under EU rules, its deputies must ratify trade agreements if they are to become law.

There are concerns that sensitive issues such as agriculture and data protection could prove an obstacle in the negotiations. But Schulz, the socialist president of the parliament, was upbeat on the prospect of a deal.

“We have an enormous opportunity to create a common market of 800 million people,” the 57-year-old German said. “The parliament, from a point of principle, is very much in favor of a free-trade agreement with the United States.”

Parliament’s early backing will be welcome news in Washington, which has been wary of getting bogged down in endless negotiation with the European Union and its 27 member states, all with differing interests, powers and demands.

The promise of billions of euros in new transatlantic business at a time of economic stagnation in Europe appears to be overcoming traditional divisions over the merits of opening up markets to international competition.

Initial estimates suggest the trade deal could add 0.5 and 0.4 percent a year to the EU and U.S. economies respectively by 2027, according to initial estimates, at a time when the euro zone is in recession and the United States expects only modest growth.

Europe and the United States account for a third of world trade, and a deal may also allow them to define the rules of global commerce before China does, especially on areas such as services and competition policy.

“The United States’ problem is that it is becoming more and more dependent on the Chinese and wants to diversify. But it is the same for the European Union,” said Schulz.

A trade deal could open the way for regulation on everything from cars to medicines to be unified across the EU and United States, removing barriers for businesses to access markets.

MORE SPAGHETTI WARS?

U.S. President Barack Obama endorsed talks last month and the EU’s leaders have also backed the plan, hoping a deal with Washington will help Europe pull out of its debt crisis.

EU Trade Commissioner Karel De Gucht, who negotiates on behalf of EU countries, told Reuters last week that November 2014 was the target to wrap up an accord since his term ends then and the United States holds midterm elections.

Schulz was more cautious, saying the sensitivity of issues such as genetically modified food and data protection meant there may be obstacles that will take time to overcome.

“Let’s be honest. Reaching a deal by November next year is extremely ambitious,” he said. “I think the Commission and the Parliament are capable of reaching a broad agreement, but you have to consider the individual European member states.”

Schulz recalled the “spaghetti war” between Italy and the United States in the 1980s caused by restrictions on Italian pasta exports. Last September, French wine growers complained about an EU plan to allow U.S. wine exports to Europe to use the word “chateau”, delaying what one EU official described as a “purely technical rubber-stamping exercise”.

Italy and Greece jealously guard “geographical indicators” that give them the sole right to brand products as Parma ham or feta cheese. U.S. farmers see that as veiled protectionism.

“Opening up always depends on the reciprocity at the other end,” Schulz said. “I believe both sides are willing.”